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The won completed a fourth weekly loss as South Korean importers bought dollars to pay month-end bills and amid concern the Federal Reserve will taper stimulus policies that have spurred fund flows into emerging markets.

Fed Chairman Ben S. Bernanke said last week the central bank could reduce the pace of its monthly bond purchases if there are signs of sustained improvement in the U.S. economy. Data this week showed consumer confidence in the world’s largest economy at a five-year high. South Korean government bonds extended the week’s drop after Statistics Korea said yesterday that industrial production climbed 0.8 percent in April from March, the first increase this year.

“Importers must have bought more dollars today as it’s the last day of the month, pushing the won down,” said Yoo Hyen Jo, an analyst at Shinhan Investment Corp. in Seoul. “U.S. economic data added to concerns whether the Fed will taper its bond buying.”

The local currency dropped 0.2 percent today and this week to 1,129.64 per dollar in Seoul, according to data compiled by Bloomberg. It slumped 2.5 percent this month and touched 1,133.72 per dollar on May 29, the lowest level since April 11.

Park Seong Dong, a director-general at Statistics Korea, told reporters yesterday it’s hard to say if the economy is showing an upturn yet. South Korean exports probably shrank 0.9 percent in May from a year earlier, according to the median estimate of 12 economists by Bloomberg News survey before data due tomorrow. That compares with a 0.4 percent gain in April.

Foreign funds bought more South Korean shares than they sold on all days except one this week, exchange data show. An index of manufacturers’ confidence jumped to the highest level in a year, the Bank of Korea said yesterday.

The yield on South Korea’s 2.75 percent government bonds due March 2018 rose six basis points today and 19 basis points this week to 2.89 percent, prices from Korea Exchange Inc. show. That’s the highest level for a five-year note since Feb. 4, data compiled by Bloomberg show.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: Amit Prakash at aprakash1

South Korea’s won fell to a one-month low on concern U.S. policy makers will reduce monetary stimulus that has fueled demand for emerging-market assets. Government bonds fell.

The dollar strengthened against all major peers and Treasury yields rose to the highest in two months after Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may taper monthly bond purchases if it’s confident of sustained gains in the U.S. economy. South Korea’s economy is still going through a “slump” and a sliding yen is hurting the nation’s exports, Finance Minister Hyun Oh Seok said today.

The won dropped 0.7 percent to 1,121.71 per dollar as of 10:44 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1,124.01, the lowest level since April 22. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 42 basis points, or 0.42 percentage point, to 8.95 percent, the data show.

“Bernanke’s comments were a signal for investors to pull out of riskier assets,” said Hong Seok Chan, an analyst at Daishin Economic Research Institute in Seoul. “The won may trade near the 1,120 per dollar level as some exporters may sell dollars.”

The Fed could “take a step down in our pace of purchases” from $85 billion a month in the “next few meetings,” Bernanke said yesterday in a testimony to the Joint Economic Committee of Congress in Washington. He defended the central bank’s record stimulus program, telling lawmakers that ending it prematurely would endanger a recovery hampered by high unemployment and government spending cuts.

Dollar, Yen

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, added 0.1 percent to 84.438. The yen weakened 0.2 percent to 103.37 per dollar.

The won has fallen 5.1 percent versus the dollar and gained 14 percent against the yen this year. That makes it harder for South Korean exporters such as Samsung Electronics Co. and Hyundai Motor Co. to compete against Japanese rivals overseas.

“The fact that the won is not a key currency exposes the Korean economy to foreign-exchange risks,” Finance Minister Hyun said at a forum in Seoul. The yen’s slide against the dollar has had a “considerable impact on our exports,” he said.

The yield on South Korea’s 2.75 percent government bonds due March 2018 rose four basis points to 2.74 percent, according to prices from Korea Exchange Inc.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: James Regan at jregan19

The won recovered from a four-week low after South Korea said it will act to curb currency swings amid renewed regional tensions as North Korea fired missiles. Government bonds declined.

Finance Minister Hyun Oh Seok said South Korea should seek to limit the won’s volatility if it intensifies because of the yen’s slide, according to Choi Hee Nam, the ministry’s director general. Financial Services Commission Chairman Shin Je Yoon said today foreign-currency liquidity will be closely monitored as North Korean risks escalate. The North fired a short-range missile for a third day today, the South’s Defense Ministry said. That followed four such tests over the weekend.

The won closed at 1,116.63 per dollar in Seoul, little changed from 1,116.60 on May 16, according to data compiled by Bloomberg. It earlier touched 1,121.08, the weakest level since April 23. South Korean markets were closed on May 17 for a public holiday. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 18 basis points, or 0.18 percentage point, to 8.98 percent.

“The authorities expressing concerns about the won’s volatility helped prevent investors from aggressively selling the currency amid missile firings by North Korea,” said Son Eun Jeong, an analyst at Woori Futures Co. in Seoul. “The government seems more concerned about the weak yen hurting the South Korean economy.”

The yen’s depreciation has been much faster than previously anticipated and competitiveness of Korean companies should be strengthened to fight currency volatility, the Finance Ministry’s Choi said.

Yen Moves

The won has fallen 4.7 percent versus the dollar and gained 14 percent against the yen this year. That makes it harder for South Korean exporters such as Samsung Electronics Co. and Hyundai Motor Co. to compete against Japanese rivals overseas. Foreign funds sold $4.7 billion more Korean equities than they bought this year through May 16, exchange data show.

The yen gained 0.6 percent today after reaching 103.31 per dollar on May 17, its weakest level since October 2008, data compiled by Bloomberg show. Citigroup Inc. said in a May 17 research note the yen’s weakness and geopolitical risks were weighing on the won.

South Korea urged the North to accept its repeated calls for working-level talks on bringing completed goods to the South from the Gaeseong industrial zone, the Unification Ministry spokesman Kim Hyung Suk said at a briefing yesterday. The jointly-run factory in the North Korean border city of Gaeseong has been shut since the North decided on April 8 to withdraw all its workers from the complex.

The yield on South Korea’s 2.75 percent government bonds due March 2018 climbed four basis points to 2.69 percent, the highest level since April 17, prices from Korea Exchange Inc. show.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: James Regan at jregan19

The won rose the most in two weeks as global funds bought South Korean shares after an unexpected increase in U.S. retail sales bolstered investor appetite for emerging-market assets. Government bonds rose.

The currency rebounded after a 2.3 percent decline over the last three days, the longest run of losses since April 8. Sales at U.S. retailers advanced 0.1 percent in April following a 0.5 percent drop in March, official figures showed yesterday in Washington, prompting speculation the Federal Reserve may end its monthly purchases of $85 billion of Treasury and mortgage debt. Foreign funds bought more South Korean shares than they sold, halting two days of net sales, stock exchange data show.

“The improved U.S. retail sales data showed signs of an economic recovery,” said Son Eun Jeong, an analyst at Woori Futures Co. in Seoul. “Speculation that the Fed’s quantitative easing program will end is rising and may slow the won’s rise.”

The currency rose 0.5 percent to 1,106.44 per dollar in Seoul, the biggest advance since April 30, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 36 basis points, or 0.36 percentage point, to 8.26 percent, the data show.

The yield on South Korea’s 2.75 percent government bonds due March 2018 fell two basis points to 2.64 percent, according to prices from Korea Exchange Inc.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: James Regan at jregan19

The won dropped the most in three months on speculation South Korean authorities will favor depreciation to support exporters as the yen’s decline makes Japanese rivals more competitive. Government bonds declined.

The yen slid to 101 per dollar for the first time in four years, extending declines spurred by the Bank of Japan’s stimulus measures to fight deflation. BOJ’s aggressive monetary easing has a big impact on South Korea, Bank of Korea Governor Kim Choong Soo said at a briefing yesterday after the central bank unexpectedly cut its benchmark seven-day repurchase rate by a quarter percentage point to 2.5 percent.

The won fell 1.4 percent to 1,106.39 per dollar in Seoul, the biggest drop since Jan. 28, according to data compiled by Bloomberg. It dropped 0.8 percent this week. One-month implied volatility in the won, a measure of expected moves in the exchange rate used to price options, rose 108 basis points, or 1.08 percentage points, today and 69 basis points this week to 7.68 percent, the data show.

“As the yen continues to fall after breaching the 100 level, overseas investors are shedding emerging-market assets and buying the dollar,” said Park Hyun, a currency trader at Woori Bank Co. in Seoul. “Although it’s still uncertain about the intervention by the government, Governor Kim’s comment about the weak yen’s impact on South Korea made traders nervous.”

The won has strengthened 13 percent against the yen this year and weakened 3.8 percent against the dollar. That makes it harder for exporters such as Samsung Electronics Co. and Hyundai Motor Co. to compete against Japanese rivals overseas.

Financial Support

The government said on May 1 it will add 11.1 trillion won ($10 billion) of financial support this year for companies, including small- to medium-sized exporters, grappling with the sliding yen. The drop in the Japanese currency is a concern as it threatens market stability, Governor Kim said yesterday.

The yield on South Korea’s 2.75 percent government bonds due March 2018 rose one basis point today and 11 basis points this week to 2.63 percent, according to prices from Korea Exchange Inc.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: James Regan at jregan19